How to Enhance the Performance of Hotel Business?

The performance of the hotel industry can be either enhanced or limited by the way in which hotel business is conceptualised. This article illustrates how economic trends present opportunities to redefine hotel business models and create value.

In many of the London hotels the context of evolving economic environments, the widespread belief that hotels are strictly in the business of selling rooms to guests in need of accommodation is narrow and thus limiting. If the industry does not take full advantage of the opportunities presented by economic trends, hotel assets will remain underutilised, potential markets will remain untapped, strategic alliances that should occur naturally will not materialise and significant revenues will be foregone.

This article presents two concepts that could offer opportunities for the industry if hotels are willing to take a few steps away from the traditional business models.

The Catwalk Concept

A model to capitalise on the opportunities presented by the proliferation of international brands

Hotels should capitalise on a key side effect of the global proliferation of international hotel brands: efforts aimed at building hotel brands have resulted in branding the guest population as well. Guests loyal to a particular hotel brand share identity traits and lifestyle preferences with each other and differ from guests that prefer different brands. Therefore, branded hotels are brick and mortar containers for very distinct, well defined, self-selected captive audiences that could be accessed for marketing purposes. This argument holds true to the extent that hotel brand preference is a reliable indicator of purchasing behavior and brand preference for other products and services.

A branded hotel can take three specific steps to capitalise on this opportunity:

First, conduct research to identify specific brands of other products and services that appeal to their guests, for example, one such brand could be a particular type of flat-screen television whose design and price tag has been targeted to a specific type of customer.

Second, explain to the companies identified the benefits of gaining access to their guests; the hotel could build guest market profiles to support the claims that its guests fit the profile of the flat-screen television’s target audience.

Third, find inconspicuous ways to grant these companies access to the guests, for example, the hotel could agree to display the flat-screen televisions in its rooms so that the guests interact freely with the product, without ever feeling part of a marketing campaign.

Variations on this approach can be applied to any type of product or service that could be adopted by a hotel, as long as its brand target market is compatible with the hotel’s guest profile. Examples include products such as design furniture, art collections and electronic gadgets or services related to wellness, health, continued learning or entertainment. The approach proposed here should not be confused with practices already employed by hotels that have successfully marketed and sold their own products to their guests by using the rooms as display space and offering hotel products via catalogues.